Summary: The Truth Behind The Business Strategy Of Outsourcing

Great Essays
The Truth behind the Business Strategy of Outsourcing The United States is one of the richest countries in the world, admired by other countries because of its strategic level of productivity and consumerism. To maintained the United States high demand, the country must adopt and develop new innovations in order to compete with other markets. Because the goal of most businesses is to create profit, the United States is one of the main countries to take their business to cheaper markets with the objective to increase profits by reducing labor cost and operating expenses. Outsourcing means “the usage of outside vendors to produce goods or fulfill services and functions that were previously handled in-house or in-country” (Boone & Kurtz, 2015). …show more content…
From the business point of view it is important to understand that outsourcing is part of globalization, and it benefits the company’s efficiency and it saves money in labor. Many Americans believe that outsourcings hurt Americans economy and are against the idea of taking Americans jobs to other countries. Bryson, a global economist for Wells Fargo said: “When jobs move from a factory in the South to one in Guatemala or China, it certainly has a negative impact on that community in the short run…But in the long run it makes things more efficient." (Hargreaves, 2012) And in fact it might make things more efficient for the company because it is relatively easier to establish a business in China than in the United States, however it is inedible to ignore the impact in American workers. “Over the past decade data from the United States Department of Commerce show that U.S biggest companies that employ a fifth of American workers reduced their work forces by approximately 3 million jobs while increasing employment overseas. Although outsourcing might not be the only reason for unemployment in America, it is unpleasant for the work force to know that millions of jobs were taken to other countries in a period of time on which American has suffered with high unemployment levels. Efficiency might be one important reason to take jobs outside of the United …show more content…
In the article The Case of Outsourcing, Hargreaves says outsourcing is a two way street, meaning it benefits the United States as well as the country were good are being produced. “Those helped are the workers in foreign countries who get the manufacturing jobs. They can then enter the developing middle class, which in turn increases demand for goods produced in the United States,” but which goods is he talking about if everything is being made overseas? Is he talking about the jobs that cannot be outsourced such as agriculture, dairy, landscaping, construction, and retails jobs? The jobs Americans do not want. According to Chamie the government is urging businesses to insource, which has only increased the number of illegal immigrant workers in the United States. In order for companies to maintain low domestic labor cost they seek to hire unauthorized workers, then the companies can refuse to pay them minimum wages, fail to comply with safety standards and not pay them employee benefits. “While outsourcing jobs and insourcing immigrant labor may indeed increase profits and be beneficial by lowering labor cost and operating expenses, the general public and especially native workers find these practices to be onerous” (Chamie, 2016) These

Related Documents

  • Improved Essays

    ‘The death of distance: Outsourcing, white collar exodus’ film involves many companies moving their call centers and contracts to foreign countries, this is called outsourcing. They particularly look at areas in southern Asia, for example countries like India, Malaysia, etc. This is a lot cheaper for big companies because it allows them to cut their wage salary lower because the quality of living is lower in LEDC’S (less economically developed countries). United States of America is a MEDC (more economically developed country), this means if a lot of companies are outsourcing to south Asian countries this can have a negative impact on globalization of the United States. This is due to outsourcing, and this is because of major companies setting up their call centers in other countries than USA.…

    • 954 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Countries like India and China are ahead of the United States in education and could be more qualified for the jobs Americans are trying to obtain with the degrees earned in the United States. Also, outsourcing to foreign countries can save business thousands, if not millions of dollars. Jobs can be outsourced and the American employee will be left unemployed. Alan Blinder says, “ You can’t hammer a nail over the Internet.” (Page 396)…

    • 1153 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    In order to keep profits high, companies are outsourcing jobs to other countries such as Japan and China. The reason being is large companies are always…

    • 1064 Words
    • 5 Pages
    Improved Essays
  • Decent Essays

    Over the past few decades, the American economy and workers have become reliant on offshore outsourcing. Angela Smith, professor at the University of Nevada, Las Vegas, author of “The Pros and Cons of Outsourcing,” defines offshore outsourcing as having the needs of a company fulfilled in a foreign country and often produced by an overseas company. The photograph “We Can Do It,” by J. Howard Miller, an American graphic artist, portrays the idea of the era in which America was flourishing, by producing all of its goods on the homefront. Today’s society is also flourishing, but many products are no longer produced in America and by Americans. Offshore outsourcing is sending jobs to distant nations to produce products at lower costs.…

    • 139 Words
    • 1 Pages
    Decent Essays
  • Improved Essays

    The loss of jobs, whether to outsourcing or inventions, has been a re-occurring issue in America since the early 1900’s. In the 1900’s, most Americans worked on farms. The farmers thought that the invention of machinery was going to end the need of farming when actually it was just the opposite. Machinery created the need for many new and highly skilled blue-collared professions. Then when manufacturing went overseas because it was cheaper to manufacture products outside of America, our economy stabilized, we created more productivity of these products and more highly skilled white-collared service jobs.…

    • 762 Words
    • 4 Pages
    Improved Essays
  • Decent Essays

    Outsourcing America, in my opinion, has been bad, as someone who was a displaced worker at one time due to the company that I worked for closing down and moving to Mexico. The benefits of outsourcing have been enormous. For workers in poverty ridden countries, it has meant jobs and fast rising standards of living. For some industries, lower labor costs have brought higher profits. Modern consumers are enjoying access to more goods at lower prices.…

    • 381 Words
    • 2 Pages
    Decent Essays
  • Improved Essays

    Large companies lose interest in domestic labor mainly because of taxes, benefits, and workers’ skill. The Government is continuity raising income taxes for both the employees and employers. Also, manufacture companies have grown exhausted because they have to carry many burdens other than wages and taxes such as insurances for workers and their dependences, unemployment insurance, or 401k match; while they can the same productivity and quality hiring cheaper labor overseas. As a result, manufacture companies see that they are paying more for labor in America than other countries, and that greatly affects their company’s revenue. However, if American workers can offer better skills and productivity, which makes the same or better revenue for their employers, manufacture companies would definitely rethink about foreign labor.…

    • 1104 Words
    • 5 Pages
    Improved Essays
  • Decent Essays

    The amount of outsourcing in America has greatly increased over the years since the first real use of outsourcing in the 1970’s/1980’s. This increase in outsourcing hit its highest once the 21first century started, and has ceased to decline since. I found this topic interesting many years ago, and first learned of it through my father. I expanded my knowledge through the news, online articles, and debates over the issue. I plan on presenting my issue to new unfamiliar audiences by defining what outsourcing is, how it’s done, who it affects, and how it affects them.…

    • 249 Words
    • 1 Pages
    Decent Essays
  • Improved Essays

    Outsourcing Trends

    • 1566 Words
    • 7 Pages

    Outsourcing as related to business processes refers to an organization contracting part of its work out to an external organization. An example of outsourcing is an organization that hires a law firm to review its contracts instead of maintaining an in-house lawyer. A risk associated with outsourcing is a conflict of interest between parties. A benefit associated with outsourcing is that an organization is able to take advantage of specialized skills and cost savings. Offshoring as related to business processes refers to outsourcing working to an organization from another country to accomplish non-manufacturing activities in order to leverage cost advantages.…

    • 1566 Words
    • 7 Pages
    Improved Essays
  • Improved Essays

    Outsourcing In America

    • 650 Words
    • 3 Pages

    Based upon research the U.S. Cenus Bureau, "More 45 million people are living currently in America below the poverty line(census.gov)". Not only does outsourcing eliminate the amount of jobs that are here in America however,it significantly drives down American wages and causes their to be difficulties for Americans to secure high -paying…

    • 650 Words
    • 3 Pages
    Improved Essays
  • Improved Essays

    Outsourcing in America is a current problem that is occurring more and more very day. Outsourcing may make the product cheaper but, that doesn’t make anything better when the factory workers are laid off because all of the work they were doing got shipped overseas. Outsourcing is alright to a point but there needs to be limits on how much each company relies on other countries for products. There needs to be a balance to where there is enough production in the U.S. so Americans can still survive. Outsourcing is starting to get out of hand in the U.S. and something needs to happen to where there are still jobs in the U.S. for the people.…

    • 504 Words
    • 3 Pages
    Improved Essays
  • Great Essays

    The United States government should not interfere with the outsourcing of American manufacturing…

    • 1945 Words
    • 8 Pages
    Great Essays
  • Improved Essays

    Offshoring Research Paper

    • 506 Words
    • 3 Pages

    According to their research.(comma)U.S. companies received a total of approximately 67 cents in benefits for every dollar that they offshored. Local workers were expected to earn 47 cents for every dollar offshored when they are hired in the United States. Overall, it results in a net benefit of $1.14 in benefits for the overall U.S. economy, but it is the individual American worker who suffers. (Where does McKinsey Global reference end) Because companies save approximately 58 cents for every dollar they offshore, and U.S. workers end up making only 47 cents per dollar, the implication is that U.S. workers lose 11 cents in earnings from labor for every dollar offshored.…

    • 506 Words
    • 3 Pages
    Improved Essays
  • Improved Essays

    Workers in america are losing so much money to the job outsourcing to china. The U.S. lost at least $245 billion in manufacturing wages in the last decade(Ray). People who lost their jobs to outsourcing jobs to china are in very bad condition because of this. The people that lost their jobs had to move on to lower paying jobs just so they can barely get by paying bills and buying groceries. That is the people who were lucky enough to find jobs to replace the one they lost.…

    • 957 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Essay On Offshoring

    • 792 Words
    • 4 Pages

    Blinder makes valid points on the rise of offshoring and how our economy may suffer from it. What he fails to mention is the fact that with America having such a dense population, the public can have a major effect on whether offshoring occurs, and if so to what degree it occurs. Self-protectionism is a key issue in American politics, such as the “Buy American Act”, and it is not to be taken lightly. Many jobs have already been lost to other countries through outsourcing. The self-awareness Americans have that offshoring is becoming an epidemic that will further threaten the American way of life, may be reason enough for companies to reconsider offshoring.…

    • 792 Words
    • 4 Pages
    Improved Essays